Implications of external price referencing of pharmaceuticals in Middle East countries

Abstract

Introduction: External price referencing (EPR) is applied frequently to control pharmaceutical prices. Our objective was to analyse how EPR is used in Middle Eastern (ME) countries and to compare the price corridor for original pharmaceuticals to non-pharmaceutical services not subjected to EPR. Methods: We conducted a survey on EPR regulations and collected prices of 16 patented pharmaceuticals and 14 non-pharmaceutical services in seven Middle Eastern (ME) countries. Maximum and minimum prices of each pharmaceutical and non-pharmaceutical technology were compared to mean prices in the countries studied by using market exchange rates. Influencing factors of pharmaceutical prices were assessed by multivariate linear regression analysis. Results: The average price corridor is narrower for pharmaceuticals (−39.8%; +35.9%) than for outpatient and hospital services (−81.7%; +96.3%). Conclusion: Our analysis revealed the importance of population size and EPR implementation on drug price levels; however, EPR results in higher pharmaceutical prices in lower-income countries compared to non-pharmaceutical services.

Keywords:

• cross-national price comparison
• external reference pricing
• international society of pharmacoeconomics and outcomes research
• Middle East countries
• pharmaceutical pricing
• price corridor for pharmaceuticals

Financial & competing interests disclosure

Syreon Research Institute gratefully acknowledges the financial support of Novartis Pharma AG to conduct this research; however, authors summarized their independent professional opinion and take full responsibility for potential errors in the manuscript. Z Kaló is a partner and CEO of Syreon Research Institute. KS Akhras is an employee of Novartis. Z Vokó is a partner & Medical Director of Syreon Research Institute. The authors have no other relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript apart from those disclosed.

No writing assistance was utilized in the production of this manuscript.

Key issues

• This is the first comparative policy research to evaluate prices of original pharmaceuticals in Middle East countries.

• The research methodology is also novel, as the price corridor of pharmaceuticals and health care services have not been assessed in previous publications by comparing maximum and minimum prices to mean prices in the study countries.

• The average price corridor was narrower for pharmaceuticals compared to outpatient and hospital services.

• In the multivariate analysis, GDP and price referencing of > 5 countries were not significant explanatory variables of relative drug prices. Ten million increase in the population size reduces relative drug prices by 6%, while mandate of lowest price in the basket of reference countries drug prices reduces drug prices by 10% on average.

• EPR results in higher pharmaceutical prices in lower income countries compared to non-pharmaceutical services, which may limit timely access of patients to new medicines in these countries compared to global markets.

• Stakeholders should understand the implications of EPR and develop solutions to prevent its negative consequences.

Notes